Treasury and FinCEN are Taking the New AML Law Seriously | JD Supra

Treasury and FinCEN are Taking the New AML Law Seriously | JD Supra

When President Biden signed the Anti-Money Laundering (AML) Whistleblower Improvement Act on December 29th, 2022, the Treasury Department had its work cut out for them.

In the shadow of the highly successful Securities and Exchange (SEC) and Commodity Futures Trading Commissions (CFTC), the new program is expected to process money laundering, sanctions busting, and Bank Secrecy Act (BSA) violations with the same vigor. Before the updated law, whistleblower awards were discretionary, with no mandatory minimum payment amount and no fund to pay them from. Like Dodd-Frank programs, the new AML law also guaranteed confidentiality and anonymity to those reporting under it.

Stephen M. Kohn, who has been representing whistleblowers since 1984, was an outspoken advocate for the law as it made its way through Congress.

“The new AML law has the potential to be the most effective transnational anti-corruption law on the book,” said Kohn, founding partner of Kohn, Kohn & Colapinto, “because money laundering plays a role in a wide variety of crimes. Everything from tax evasion to bribery to drugs could involve laundered funds.”

The question became: how? How was FinCEN, the Treasury Department’s Financial Crimes Enforcement Network that was designated to carry out this law, planning on running this program? Did they have the money? The manpower?

The FY 2024 Budget speaks for itself.

  • $29,347,000 increase in previous year’s budget for purposes of implementing the AML Act.
  • 60 new full-time employees dedicated to AML Act implementation.
  • 400 total new full-time employees expected by the end of FY 2024.

According to the Budget, FinCEN will use these funds and employees to:

  • administer and manage the $300 million revolving award fund, including by disbursing awards in a timely and secure manner;
  • develop a public facing information technology system for the submission of tips and award applications;
  • develop the capacity to securely share tips and facilitate review by FinCEN and law enforcement partners;
  • recruit enforcement personnel dedicated to investigating BSA and other violations submitted by whistleblowers; and
  • recruit personnel dedicated to the administration of the whistleblower program to review tips, adjudicate award applications, coordinate with DOJ and other relevant agencies, and engage in outreach and education campaigns with the public.

“We’re heartened by this request and the justifications made for it, especially when it comes to Russian money laundering,” Kohn said. “We know that Russians have laundered well over 200 billion dollars into the West, and there is an immediate need to identify every dirty penny from every oligarch.”

Throughout his career, Kohn has helped draft key whistleblower legislation and regulations, including those incorporated into the Sarbanes-Oxley Act, Dodd-Frank Act, the IRS whistleblower amendments, and the AML Whistleblower Act.

“FinCEN’s request is an excellent first step, proving that they understand the magnitude and potential of this law,” Kohn said. “Money laundering is the backbone of worldwide corruption, and this law is the spear.”

In an April statement before the House Committee on Financial Services, Himamauli Das, Acting Director of FinCEN, spoke to the exciting challenges that the new AML act will bring.

“The AML Act reinforces the important role we play in national security by modernizing and empowering our enforcement regime, by introducing a new whistleblower program, and by emphasizing the need for an effective, risk-based and modern AML/CFT regime that places a focus on efficiency, the use of innovative technology, and enhanced collaboration with all stakeholders,” Das said.

Das took the leading FinCEN position in September 2021.

“We take our role in safeguarding the financial system very seriously, and although our expanding responsibilities have forced us in some cases to make challenging resource tradeoffs, our workforce is proud — as am I — of FinCEN’s contributions to combating illicit finance both to protect U.S. national security and to protect American taxpayers and businesses from criminals and corrupt actors…” Das said.

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